August 3, 2009
Volume XXVII, Issue 5

Alcatel-Lucent Acquires Velocix for Multi-Source CDN

Alcatel-Lucent has acquired Velocix (formerly known as CacheLogic), a leading global provider of peer-to-peer (P2P) based content delivery network (CDN) infrastructure and services, for an undisclosed sum. Velocix, which is based in the UK, provides expedited Internet delivery for digital assets such as video, music, software, and games. In 2002, the company developed innovative P2P caching concepts and created a cache appliance solution that was adopted by leading Internet service providers (ISPs).

In 2005, the company launched its own hybrid P2P CDN. In December 2008, Velocix launched its Metro solution for ISPs. Velocix Metro packages the core components and capabilities of the Velocix CDN as a turn-key solution for ISPs and carriers, enabling them to deploy their own advanced digital delivery capability.

Alcatel-Lucent said the acquisition of Velocix gives it an enabling CDN infrastructure solution for ISPs and a wealth of experience and expertise that complements its existing technology and business initiatives.

"This acquisition strengthens our leading-edge portfolio of products and services in a key strategic area. Combined with our integration capabilities, it fits nicely into our application enablement strategy and our vision of the 'high leverage network' that supports it. It also demonstrates our company's commitment to investing in the capabilities, know-how, and technologies needed to effectively support the rapid evolution towards a video-centric world - with maximum reliability and optimal quality of experience," said Philippe Keryer, President of Alcatel-Lucent's Carrier Product Group.

BitTorrent Corrects Record in Net Neutrality Hearing

BitTorrent has shaken up the Canadian Radio-Television & Telecommunications Commission (CRTC) network management hearing with a late submission that seeks to set the record straight on BitTorrent and its impact on ISP networks. The company begins by noting: "Our company, more specifically our BitTorrent application, has been referred to repeatedly in various submissions in this proceeding. From these submissions, there appear to be some misconceptions as to the effect of BitTorrent, as well as in general P2P applications, on the Internet and, in fact, there has been an overstatement of the effect of such applications on network congestion."

After describing BitTorrent, the submission addresses several misconceptions presented by Canadian ISPs: Shaw argued that the high number of connections with P2P subverts the fairness of TCP - BitTorrent says this is incorrect, since very few connections (4-5) are used at any one time; Rogers argued that users do not care about upload performances - BitTorrent says this is inaccurate given the correlation between download and upload for BitTorrent users; Cogeco argues that P2P is not a real-time or interactive application - BitTorrent says this, too, is false since some apps like Skype are clearly interactive and some BitTorrent clients supports streaming; Rogers argued that P2P can create 24/7 always-on usage - BitTorrent says this is exaggerated with the average client only active around 4 days per month.

BitTorrent then focuses on the effect of traffic management practices on the application's performance: "BitTorrent offers commercial services using P2P technology to deliver professional content for publishers. These clients use the underlying BitTorrent protocol but are also designed to report a considerable amount of performance information about the underlying networks, as this information is critical to publishers who need to track how effectively their content is being delivered."

"These services are in use worldwide and the critical measurement for the system is a metric called 'offload,' which is essentially the percentage of traffic that was able to be delivered using the P2P elements of the system. Overall offload for the entire ecosystem (all customers, all regions of the world) averages around 80%, and when measured by individual ISP typically ranges between 70% and 90%. However, for Canadian ISPs this metric drops to 30%, the lowest for any major network worldwide. One can only assume that Internet traffic management practices (ITMP) or underlying network performance conditions are attributable to this low level of system performance in Canada."

BitTorrent's proposed approach: "The neutral nature of the Internet is something that should be preserved or it may result in unwanted or unintended consequences (i.e., lack of innovation which may slow growth of network development and capacity). However, this needs to be balanced against the recognized need for operators to manage their networks. BitTorrent submits that to be reasonable, network management solutions should be non-discriminatory in nature. No solution that singles out a single application or protocol should be considered neutral."

"When presented with this challenge in the United States, we were able to work with one of the largest ISPs, Comcast, towards a network management solution that manages heavy users, not applications and only does so during necessary moments of intense congestion. In this way, every user is accorded his or her fair share, regardless of the applications in use or destinations involved. ITMP that singles out specific applications will hamper and harm innovation at the edge and contribute to the centralized control of media, restricting the Internet to those who can afford the costs of traditional distribution on the Internet. The potential impairment of freedom of expression in this case should not be underestimated."

The BitTorrent filing should cause the CRTC to rethink some of the ISP claims regarding BitTorrent and the approach of some providers to traffic management.

LimeWire Appoints New Head of Global

Zeeshan Zaidi, formerly of Sony BMG, RCA Music Group (RMG), and Arista Records, has joined LimeWire as Head of Global, a newly created position, it was announced this week by LimeWire CEO George Searle.

Zaidi comes to LimeWire from Nabbr, where he served as Chief Operating Officer (COO) and Head of Business Development for the online media start-up that distributes premium entertainment content and brand advertising to a Gen Y audience. He will be responsible for developing and executing a global strategy for LimeWire.

Prior to joining Nabbr, Zaidi was Vice President of New Ventures for Sony BMG Global Digital Business Group. There, he was charged with developing and launching new businesses, and developed revenue streams using subscription, retail, and advertising models, leveraging the assets of all of Sony BMG's US labels as well as catalog inventory.

He was Vice President, Digital Business Operations, for RMG prior to joining Sony BMG. He oversaw the digital business of RMG, which included RCA Records, Arista Records, J Records, and RCA Victor. In this position, Zaidi was responsible for the commercial exploitation of RMG's frontline and catalog content in all digital formats, including digital downloads, streaming subscriptions, mobile formats, video-on-demand (VOD), and online radio.

Prior to RMG, Zaidi was Senior Director, Marketing for Arista Records. In this position, he was responsible for all new media marketing and partnership marketing for Arista artists including: Avril Lavigne, Usher, Santana, OutKast, Pink, Sarah McLachlan, Whitney Houston, and many others. Prior to that, he was Director of Mergers and Acquisitions and Corporate Development for Bertelsmann from October 2000 to April 2002.

Zaidi graduated magna cum laude, Phi Beta Kappa with an AB in Economics from Harvard University in 1996. He received his MBA with honors from Harvard Business School and a law degree cum laude from Harvard Law School in 2000.

And we support the conclusion of fourteen-term Congressman Edolphus Towns who serves as the Committee Chairman: it's time for government employees and contractors to stop using recreational file-sharing applications on computers intended for national security work.

LimeWire's leadership during the past two years in addressing the problem of users unknowingly entering sensitive or personal data into distribution via its file-sharing software has been exemplary. It is now extremely unlikely that a user of the current version of LimeWire will accidentally share a file he or she does not intend to share. The company deserves enormous credit for this major accomplishment.

As another witness demonstrated in an extended opening audio-visual presentation at the hearing, however, confidential files that are already accessible or may be uploaded from sources other than LimeWire onto the Gnutella network illustrate the consequences of improper monitoring of data entry points on the Internet.

Unfortunately, this introductory demo sensationalized the issue through inflammatory examples of security breaches that have occurred as institutions and consumers publish private material online in error. The more technically complex explanation which followed of the many steps LimeWire has taken to attack this problem at it source - such data's original entry points - while not as provocative, irrefutably underscored LimeWire's real and substantive progress.

There has been exponentially increasing digitization and online transferring of personal information - from electronic filing of tax returns to storing of medical records - and a proliferation of new applications that access the Gnutella network in addition to LimeWire and serve as data seed-points. Concurrently, there has been widespread institutional laxity among government agencies and private sector entities with respect to safeguarding their sensitive data. And most importantly, once any such file has been disseminated to hundreds, thousands, or millions of networked devices, it is virtually impossible to recall that file or prevent it from being added to an ever-expanding list of related search results.

While the demonstration graphically dramatized consequences of data breaches, LimeWire's great amount of hard work - and now its own demonstrable success - at stopping such breaches from occurring at their points of origin seemed to have gotten lost amid expressions of astonishment and frustration in reaction to the demo by certain Committee members.

The challenge of deleting the massive amount of personal and sensitive data that is mistakenly in distribution on the Internet is indeed a very disturbing problem of a different order of magnitude.

To seriously blame LimeWire for that latter problem, which seemed to happen at times during the hearing, would be like chastising NASA, after complying with an order not to launch a spacecraft, for the fact that airplanes and satellites continue to fly through the sky.

We commend Congressman Bill Foster (D-IL) for demonstrating a depth of technological understanding related to the subject matter of this hearing. We also commend Congressman Brian Bilbray (R-CA) for his constructive contributions in closing the hearing by asking for Mark Gorton's input on legislative process and encouraging pro-active involvement of LimeWire and the P2P industry.

As a software firm, LimeWire is continually innovating and upgrading on a significant number of fronts. Pinpointing exactly when during the past few years a particular item was first introduced into the development process or a particular feature completed its alpha trial or beta testing would be challenging to do without referencing records.

The company protects the integrity of its network and its users from malicious attacks by spammers, virus carriers, and other malware purveyors, and this is accomplished through a largely automated process. It should be hoped and expected that a foreign entity seeking to monitor or spy on user activity without authorization would be blocked.

Wednesday's session took place as the industry has begun to receive responses from the US Federal Trade Commission (FTC) on compliance reports regarding self-regulatory actions taken by LimeWire and other leading file-sharing companies to address inadvertent file sharing in conformance with principles established in 2008 by the Inadvertent Sharing Protection Working Group (ISPG).

In addition, the industry is working with the House of Representatives Energy and Commerce Committee's Subcommittee on Commerce, Trade, and Consumer Protection on its proposed HR 1319 "The Informed P2P User Act," focusing on the same issue as Wednesday's hearing, where we are actively participating in support of the goals of this bill.

LimeWire's leadership of the industry-wide initiative working with appropriate federal regulatory authorities has resulted in tremendous progress in addressing the problem of inadvertent file sharing by users of such software. It should be helpful for the Oversight Committee to consult with the FTC, Department of Justice (DOJ), NY Attorney General, and other authorities on the company's track record of pro-active collaboration in working with relevant government agencies to address identified problems.

The company made substantive changes to the functionality of its software and its user communications, and for all practical purposes has eliminated the specific problem that was the focus of Wednesday's hearing with the current version of its software. Share wisely, and take care.

Online Content Exchange Guide

Content exchange online is evolving profoundly. P2P solutions are constantly being perfected. New platforms, such as news groups and video-sharing sites, are developing at a rapid pace; and private solutions, such as closed communities and the use of instant messaging (IM), are now becoming more available.

Meanwhile. the copyright infringing ecosystem is complex: it combines specialists in the acquisition and distribution of content; legal technologies which are distorted for unauthorized exchange; and an extensive community dynamic.

All the indicators seem to imply that the level of unauthorized exchange continues to grow, in spite of being more complex to measure. However, growth is observed in the different levers for countering infringement: clarification of legal status, evolving competitive licensed offerings, and, especially, new technologies that make digital rights management (DRM) more credible. Some unauthorized sites are consequently opting to develop legal solutions.

A new report presents the added-value chain of content exchange on the Internet, technical innovations, and key players based on a number of case studies. It offers components for measuring infringement and sets out the main tools for countering unauthorized exchange. It concludes by describing the challenges facing the content and telecommunications industries in the fight against copyright infringement.

Dillon explains that completing and serving CDN services contracts - the company has struck more than 200 deals with "companies of all shapes and sizes" for the transport of website and video traffic - is a relatively simple and quick process, sometimes taking just days. It's also relatively easy for customers to switch among CDN service providers, too.

Selling CDN infrastructure, such as Velocix's Metro node, to carriers, though, is a different proposition, as Dillon and his colleagues found out when working with Verizon, the CDN company's leading Metro gear customer to date.

For carriers, "that's a strategic purchase. They want to buy from a company that they know will be around for a long time. We managed to bring Verizon on board, but it was a challenge. They had a lot of questions... It was tough," says Dillon.

With much of the company's focus on getting the Metro product deployed in service provider networks, the management team decided early this year to seek a "corporate backer" that could give it the solidity and longevity with which carriers feel comfortable. "We talked with a number of different players, including bandwidth management companies and service providers, but we decided that a network equipment provider (NEP) was the best fit."

Dillon won't name any of the other companies with which Velocix held discussions, but it didn't take too long before AlcaLu's IP division, headed by Basil Alwan, expressed interest. From then, the deal was driven on AlcaLu's side by Steve Vogelsang, VP of Business Strategy at the IP division, says Dillon, and the two companies started approaching "joint prospects" before the acquisition deal closed last week.

The timing was good for AlcaLu, which, according to spokesman Kurt Steinert, had been considering developing its own technology so it could build dedicated CDNs for carriers, "but we realized it was extremely complex, so decided to pursue an acquisition. Velocix is good for us because it's very focused on video."

Velocix, at least for now, will continue to operate as a stand-alone operation within AlcaLu's IP division, with all 35 staff, the majority of whom are in the UK, still on board. The company has seen some traction in the UK, where it has been involved in trials with cable operator Virgin Media and the BBC. It's also believed to be working with BT Group on its CDN plans.

Product Placement / Creating Women Gamers

According to the folks behind NPD Group's Gaming Segmentation 2009 report, the percentage of girls and women playing console video games has risen 5% since last year.

That's great news for PlayFirst Games chief executive Mari Baker, whose female user base for habit-forming games like "Diner Dash" and "Chocolatier" needed validation from women, which NPD Group says make up 28% of console users.

"Historically, there's been this view that girls don't use computers, and women don't play games," Baker says. "Women are just not as interested in blowing things up and seeing blood spatter all over the screen."

While there certainly are women who enjoy destroying a boomer zombie in "Left 4 Dead" as much as the next person, female gamers rarely fit into the stereotype of the doughy, caffeine-quaffing, online "Call of Duty" playing fanboy whose Microsoft Xbox 360 is near meltdown. With female gamers making up 40% of the entire gaming community, according to an Entertainment Software Association (ESA) study conducted this year, female gamers are becoming increasingly difficult to stereotype.

Who says consoles are the best way to gauge female gamers? While NPD Group makes a valid point about the Nintendo Wii and games like Wii Sports (and the upcoming Wii Sports Resort), Wii Fit, EA Active, and Ubisoft's "Rayman" series drawing a broader audience to consoles, the demographic turns when you go online. The PlayFirst gamers that made "Diner Dash's" harried waitress Flo the Mario of "casual gaming" are nearly 70% women, with a median age of 37.

"Part of what we've done in our games is develop strong female heroines, but also games that are intelligent and appeal to a different variety of people," Baker says.

Meanwhile, PopCap games, which produced hits like "Bejeweled," "Peggle," and "Zuma" before encouraging users to unleash their veggie beast in the ridiculously addictive "Plants vs. Zombies," has a 65% female audience, three-quarters of whom are over age 30. The Electronic Arts-held Pogo.com, Sierra Online, and other game sites that draw huge audiences of female gamers all took away the same lesson: when you need to make a great game with very little money, you can't afford to discriminate.

"We don't target women gamers; we make games for everyone," says Garth Chouteau, Senior Director of Public Relations for PopCap games. "If you make great games that don't pander to women and don't offend women, women will play them."

That was the thinking that made games from "Pong" and "Pac-Man" to "The Sims" and "Mario Kart" so popular, and it's something that's still considered in game-testing sessions.

uTorrent - A Beginner's Guide to BitTorrent Downloading

Here's an easy step-by-step guide that will help you start downloading movies, music, TV shows, and more in no time at all.

For most people, getting started with the whole "BitTorrent downloading thing" can be pretty intimidating. Sure maybe some of you had practice with Napster or Kazaa back in the day, but times have changed. Now it's "trackers" and "clients," and the list of new terminology goes on and on. So exactly how and where to begin can be a daunting and intimidating proposition.

So for those of you looking for an easy way to find the path to downloading enlightenment, here's an easy quick-step guide to get you up and downloading in no time at all.

The first thing you need to do is acquire a BitTorrent client. This is the program that will do the actual downloading for you. There are a great many to choose from and each has its own positives and negatives, so it's up to you decide which one best suits your needs and PC capabilities.

Currently, the most popular client server program is uTorrent because it's relatively simple, effective, and, most importantly, lightweight. It's small memory footprint consumes only 6MB of memory. The guide below will take you through the uTorrent set-up process and beyond.

To begin, download uTorrent and install it.

Now we need to configure it to work properly and at a maximized setting based on your PCs Internet connection speed. Select "Speed Guide" from the Options Menu. Run a "Speed Test" and note your upload connection speed. Select your connection speed determined in the drop down menu as shown. Choose a port number between 49512 and 65535 (the recommended range).

There are a number of different features and options, but the only one we'll concern ourselves with is where you want your downloads to go. You'd be surprised at how many people have trouble locating where their downloads are. Select "Preferences" from the Options Menu. Here simply enter the folder location for where you want your downloads stored.

That's it. You're finished. Congratulations.

Now what do I do? First you need to find what's called a BitTorrent tracker site. It's a site which has the actual torrent files that allow users to connect with one another and share data.

The LegalTorrents tracker site complies with copyright laws. Use the download arrow in order to download the torrent file and thus the corresponding content. The files should then appear in uTorrent and begin downloading. Easy enough right?

Sneak Preview of the Spotify P2P iPhone App

The Spotify iPhone app, which is currently awaiting Apple's approval, is a very simple application, extremely easy-to-use, and the sound is magically good.

The Radio feature of the desktop software is not present in the iPhone app, nor is Play Queue. Otherwise pretty much all the essential features are there.

You open up the app and see your playlists. You select a song and - even over 3G, not WiFi - the track streams almost immediately.

If you tap Offline Playlists and you select what you want to play when you are out of range of a 3G signal, the playlist will sync to your phone. Offline playlists need to be synced over WiFi; hence it's clear there is some kind of download happening.

We don't actually as yet know how they do this. There must be some kind of data download that brings in tracks which don't appear as MP3s or as discernible tracks outside the app itself. Could the files end-up being hacked out of the application?

Playback resumes where you left-off after closing the app. While you're playing a track you can click the "i" button and add the track or the album to your playlists.

You can also set-up new playlists directly within the app. Any changes you make to playlists are synced with the desktop version. You can search on tracks, though not artists, right now.

However, the biggest surprise is that the app works very well just over 3G. The latency between tracks is only slightly longer than over WiFi. The sound quality is excellent.

This is going to be Spotify's killer feature - as it is on the desktop - the ability to play any track in its catalog with no latency.

Is the Spotify app the first P2P app on the iPhone? It looks like it might well be. Last.FM's iPhone app is pretty good but its latency - since the data has to stream in with no P2P software to help it - is much greater and discernible to the ear. Plus of course Last.FM is really a radio station, not the proverbial celestial jukebox.

Spotify Co-Founder Daniel Ek said, "We have a great relationship with Apple, think the iPhone is awesome and absolutely expect them to approve our app in the next few weeks. Apple has already approved several other music services such as Last.FM, Deezer, and Pandora. We very much look forward to people being able to access their Spotify library wherever they might be and we've spent significant time and resources to ensure we've followed Apple's developer guidelines point-by-point."

QTRAX: "We are Nothing if not Dogged"

It's pretty emotional stuff, too: he admits that the company has chucked out several versions of its software, gone through "two sets of expensive licenses with the music industry," and suffered the "spectacular international humiliation" of its aborted launch last year.

He also says lack of cash has delayed the service's relaunch, but that the date will be announced imminently on the back of new funding. "We are nothing if not dogged. And stubborn. And determined," he writes.

Kontiki Goes after Cisco with Live Video for Enterprises

Kontiki offers live video for enterprises in a move to compete with enterprise networking giant Cisco Systems in messaging and collaboration. While Cisco sells hardware to propel its video distribution, Kontiki is offering P2P software plug-ins to let IT administrators in branch offices of large enterprises deploy live video.

It's no secret that video is a major collaboration tool in large companies these days. For companies where employees are often geographically dispersed, video makes it easier and cheaper for workers to meet face to face without spending money on airfare.

Kontiki on July 28th introduced Kontiki Live, a video broadcasting software plug-in that companies install on workers' PCs to deliver video to their employees. Designed for companies with thousands of employees, the product is an alternative to installing streaming and caching servers from Cisco Systems.

With Kontiki Live, businesses executives can create ad-hoc meetings for crisis communications, or plan quarterly meetings and town hall sessions to help get the message out across the corporate LAN.

Traditionally, live video has proven too expensive for businesses because it requires significant WAN bandwidth upgrades and network hardware investments, along with time and costs associated with maintaining the video system. This costs companies millions of dollars over time.

Kontiki CEO Eric Armstrong told eWeek that 70% to 90% of employees in Fortune 1000 companies work in satellite offices that are constrained by bandwidth. In these offices, anywhere from 10 to 200 employees are sharing bandwidth connectivity rates ranging from 256Kbps up to 4Mbps, Armstrong said.

When these workers watch a video simultaneously, it will overload the WAN, which is reserved for business applications. To alleviate that bandwidth burden, companies would buy hardware servers from Cisco Systems.

Kontiki offers its video content over the LAN instead of the WAN so that multiple, simultaneous users can watch content live or on demand.

Kontiki Live leverages the company's P2P technology to support multiple bit rates for live events. The software also automatically detects user connectivity to serve the appropriate load of live video without impacting the network.

Kontiki Live, which has been beta tested by companies ranging from 2,500 to 260,000 employees, is available now starting at 10 cents per user minute.

Gartner analyst Lydia Leong told eWeek that Kontiki's solution is unique because it is a pure software distribution that IT administrators deploy to employees' desktops.

"Most of the solutions you see from companies like Cisco involve installing hardware," Leong said. "That's all well and good when you have lots of things concentrated in a couple of offices, but the more you get branch and small offices in your organization, it becomes less effective trying to deploy a solution to 100% of the users."

US Federal Government to Offer Cloud Computing Services

The US Federal Government has plans to offer both software-as-a-service (SaaS) for government agencies and a cloud-based platform for agencies to develop, test, and deploy new applications. Those programs could be announced at the Government 2.0 Summit in September, according to a report from Federal News Radio.

SaaS offerings made available will be government-approved services like e-mail, productivity apps, document management, and business process management software. Those services are intended for use by other government agencies. Even more exciting may be the application platform that's part of the plan.

The prospect of government agencies using a government cloud platform to build and deploy web-based applications as the private sector has used services like Amazon's cloud computing is exciting. By lowering overhead and easing application management, a government cloud could yield a wave of application innovation across agencies. That's the theory at least.

If government is to become the next hot application development sector, it will have to compete with a private tech sector that's already deep into this paradigm and offers developers the possibility of turning cheap web apps into huge riches through acquisition by larger firms.

Also worth watching will be any integration between the government's new cloud platform, data created by the apps deployed on it, and the federal site data.gov, where an ostensible cross-section of public data is cataloged for subsequent use as development fodder.

Creation of a mutually beneficial development ecosystem seems ambitious and promising, but could be far-fetched. Apps on a cloud, contributing data to the data storehouse, so that other developers could pull that data back onto the platform to create new apps and feed new data back into data.gov listings? Sounds too good to be true.

For a more in-depth look at the government's cloud agenda, see the write-up by Jason Miller at Federal News Radio.

Vudu P2P Streaming Video to be Embedded in LG TVs

Vudu's P2P video-on-demand (VOD) service will be coming to select LG TVs in August. The service will effectively embed the functionality of the Vudu BX100 set-top box (STB) into televisions, obviating the need for connecting an external box to access the Vudu lineup of movies and TV shows, hundreds of which are available in HD video and 5.1 Dolby surround sound.

Vudu announced a deal with Entone earlier this year, but the LG deal offers a more mainstream and widely available avenue for the company as it shifts from a standalone hardware maker to a video service provider. Vizio, for instance, had previously listed Vudu as one of several media providers for the "Vizio Internet Apps" that are slated for its upcoming VF552XVT model, but it has yet to provide additional details.

The Vudu feature will appear on LG's "Netcast" TVs, which currently include the LH50 LCDs and the PS80 plasmas. It will join the already strong interactive features on those sets, which include Netflix, YouTube, and Yahoo Widgets.

Vudu claims that the embedded version of its P2P video client will offer the same features and performance as the BX100 STB. That unit's HDX 1080p video is the best Internet video we've seen to date, but it requires pre-caching on the BX100's built-in hard drive on all but the highest bandwidth broadband connections. We'll be curious to see if Vudu and LG can deliver a similar experience without the ample storage space.

In recent weeks, Sony has announced that it's bringing Netflix to some TVs, while rival Samsung will be adding Blockbuster. Roku's $100 Digital Media Player is expanding beyond its current Netflix and Amazon offerings to deliver Mediafly and Blip.tv content, with the promise of even more coming later this year. Netflix and YouTube streaming, meanwhile, are available on an increasingly wide array of TVs and Blu-ray players as well.

Pirate Bay Buyer Says Deal Nearly Done

The Swedish-based software concern's stock surged 150% following Thursday's news that it has secured financing for the $7.8 million cash and stock deal in hopes of turning the unauthorized site into a licensed, pay-to-play destination for videos, games, music, and software.

The company's announcement came two days after rampant speculation that the deal to transform TPB into a legitimate site was faltering.

Hans Pandeya, GGF's chief executive, said Thursday that investors have agreed to the deal, which is expected to close August 27th. Shareholders must also give the green light, which appears likely, as Pandeya and other company executives are its principal shareholders.

"The Pirate Bay is back. We are looking forward to a successful completion of the acquisition of TPB, one of the world's top 100 sites," Pandeya said in AktieTorget, a Swedish-based exchange listing GGF's stock, which has seesawed since the proposal was announced last month.

The developments also come as an Amsterdam court ruled Thursday that TPB must cease operations within ten days in The Netherlands or face millions in fines. Hollywood studios are seeking to have the BitTorrent tracking site - as it now currently operates - shuttered worldwide.

TPB's four founders of the 5-year-old site were convicted in Sweden this spring of facilitating copyright infringement. They remain free of their year-long sentences pending appeals.

GGF said it is mulling whether to assume TPB as its new namesake as part of the transaction.

The idea is to convert as many as 20 million consumers who use the site from "pirates" to paying customers. The free videogames, pre-release Hollywood blockbusters, and gigabyte-length discographies that currently dominate the site's most-popular list will be gone, replaced by whatever content the games, movie, music, and software industries agree to market on the site.

The company said that it is in final negotiations with a global player to help bring its business model to fruition.

Skype is Huge Threat to Russian National Security

Telephone companies in Russia have asked Prime Minister Vladimir Putin to shut down P2P telephony sensation Skype in the country.

The powerful lobbying group, which was formed in partnership with Putin's party, has not admitted that Skype is hurting its companies' revenues. Instead it is using the argument that Skype is a threat to national security.

The lobby has created a working group to draft legal safeguards against what it said were risks posed by Skype and other voice-over Internet-protocol (VoIP) telephone services.

Russian telecom executives portrayed the most popular VoIP programs like Skype and ICQ as encroaching "foreign entities" that the government must control. They don't mention that their companies are inefficient and can't compete with VoIP providers.

A press release from the lobby said, "Without government restrictions, IP telephony causes certain concerns about security." It continued to expose the lobby's true concern, however, by saying, "Most of the service operators working in Russia, such as Skype and ICQ, are foreign. It is therefore necessary to protect the native companies in this sector and so forth."

Russia isn't the only country that has concerns about VoIP encryption. Governments across the world are miffed that they can't spy on Skype calls. Obviously this means that criminals and terrorists will use them, rather than disposable cellphones or traditional phone lines.

However Russian telephone companies have been losing cash to VoIP outfits. Some enterprising Russians have even set-up shops for people to make cheap untraceable calls.

As an alternative to Skype and its peers, the telecom executives proposed creating VoIP services inside their own firms, which would then make them "safely" available to the Russian public. In other words, if you can't compete, offer the same service and get the government to prop up your cozy oligopoly by enforcing its use.

US Lawmakers Say Downloading Files Is Unsafe

A Congressional committee is looking at what it fears may be risks in file sharing to individuals' files and national security - and possibly how to legislate it.

The committee is calling for more stringent federal regulation of file-sharing networks than under the previous administration. Meanwhile, the Federal Trade Commission (FTC) is conducting a review to see how companies are complying with voluntary industry standards put in place during the last two years.

Popular file-sharing software includes Kazaa, which recently moved to a subscription-based model, and LimeWire, whose Chairman Mark Gorton testified at the House committee hearing this week.

One danger lawmakers worry about with such networks is inadvertent file sharing, a scenario where a computer connected to the Internet could potentially allow other computer users with similar software to search its hard drive and copy unprotected files.

"We totally support the intention of the currently proposed protective measure (HR 1319), but are concerned about whether it makes sense to put another law on the books when we should wait for the Federal Trade Commission's (FTC) compliance report," Lafferty told ABC News.

"I am happy to report that immediately after the committee brought the issue of inadvertent file sharing to my attention at the July 2007 hearing on the matter, LimeWire began the process that culminated in all but eliminating inadvertent file sharing with the LimeWire application," he said.

This week's hearing comes two years after the committee first launched an investigation of inadvertent file sharing focused primarily on LimeWire.

Economist Says P2P Lowers Crime

Economist Tom Koltai wrote an article recently in which he makes the case that since 1992 social networks and file sharing are partly responsible for decreasing crime rates in this country.

"1992 was the year that competition hit the USA with tremendous growth in pay-based online services, like Prodigy, Genie, AOL, and Compuserve," he writes. "Compuserve introduced the first known WYSIWYG e-mail content and forum posts, with forums growing rapidly to allow individuals to post opinions and commentary on a wide variety of subjects."

It's this capacity for free speech and the unfettered ability to share ideas and information with one another that Koltai says is what "would appear to be assisting in lowering the crime rate."

"The CompuServe forums evolved into the present day blogosphere and social networking that has taken the Internet by storm and given the people of the world a non-edited conduit to their peers," he adds. "1992, was curiously also the year that crime rates started to drop in the USA; and 1998 was the year that another noticeable dip occurred. The year that Napster was born."

He admits that he's not a social-behavioral psychologist, but he thinks the data suggests that when people have "economically priced entertainment" they commit less crime.

On this basis he then estimates the government has saved some $58,151,289,000 ($50/day) on prisoner "accommodation costs" alone, with "obvious additional monies saved in transportation, arraignment, trial, and public attorney fees. This does not include the insurance moneys saved, the decreased crime rate effect on consumer psychological well being and the lives and property saved," he says.

Mainstream opinion is that crime rates are decreasing due to harsher penalties via "three-strikes" and mandatory sentencing laws, that people are simply being locked away so they can't commit further crimes. However, certainly there is no single reason for decreasing crime rates so perhaps it's fair to argue that social networking and P2P are indeed part of the reason. People who are busy chatting with friends and family or downloading content to entertain themselves with are probably not going to be the ones going out to rob a liquor store or steal a car.

House Committee Chairman Urges Regulations for File Sharing

House Oversight and Government Reform Committee Chairman Edolphus Towns said during a hearing on the safety of file-sharing software that he plans to introduce legislation that would ban open-network software from government and contractor computers and networks.

Towns said he also plans to meet with the new FTC Chairman to request that the agency investigate whether inadequate safeguards on file-sharing software such as LimeWire constitute an unfair trade practice. An FTC spokesman did not have an immediate comment.

He added that the Federal Communications Commission (FCC) should examine the file-sharing industry. An FCC spokeswoman declined to comment.

LimeWire Founder and Chairman Mark Gorton defended his company, saying the ability to inadvertently share files has been eliminated in the newest version of the software and additional steps have been initiated to put the user more in control.

"Are we perfect? No," Gorton told the Committee. "But we have made enormous strides in the last few years."

"In order for LimeWire users to change their default settings to enable document sharing, they have to click nine times and disregard three warnings," Gorton said.

Public interest groups such as Public Knowledge said the attack on file-sharing software is phony and misdirected. Robb Topolski, Chief Technology Consultant for Public Knowledge, said that the update to the software is a change from previous behavior driven by criticism that the LimeWire application shared more than the user knew or intended.

"Now, it shares nothing until sharing is specifically enabled," he said. "LimeWire is perfectly safe."

Congress Wants to Blame LimeWire for Staffer Mistakes

This started a few years ago, when suddenly grand-standing members of Congress started blaming LimeWire for "leaking" a confidential terrorist threat assessment. Of course, that was misguided.

The problem wasn't LimeWire (or any file-sharing software), but the errors of government employees who: a) put file-sharing software on government computers; b) didn't properly wall-off the software; and c) put confidential info where it could be shared.

Earlier this year, suddenly, the issue came up again (and again targeting LimeWire). It was instigated by aggressive entertainment industry lobbyists who have concocted a huge story about how LimeWire is to blame. And politicians always seem willing to buy it.

The latest is that some in Congress are planning legislation after claiming that "Secret Service safe-house locations, military rosters, and IRS tax returns" were available via LimeWire - the same things mentioned in the PR e-mail from the entertainment industry lobbyist.

Some Congressional committee members tried to one-up each other with proposals. Others planned to pass laws that would ban the use of file-sharing software on government computers (you need a LAW for that?) and to have the FTC investigate LimeWire.

And, of course, the real goal in all of this: politicians want to pass a law demanding that the government "undertake a national campaign to educate consumers about the dangers of file-sharing software." That, of course, is actually the end-game here. The entertainment industry and their shills have been demonizing file-sharing software for years, and now want the government to help.

So the best way to do that was to find some folks who misused the software, get some headlines about how file-sharing software "exposed" Obama's safe-house locations, and then get the government to put in place some entertainment industry propaganda.

Backers include the various entertainment firms (bonus - government pitching their propaganda story) and a few tech companies who sell filtering/blocking technology (bonus - government increasing demand for their technology).

Court Orders Joel Tenenbaum to Pay $675K

A Boston University grad student was ordered to pay four record labels $675,000 Friday for downloading and sharing unlicensed songs on the Internet - but he's not singing the blues.

"I'm disappointed, but I'm thankful it wasn't millions," said Joel Tenenbaum, a 25-year-old doctoral student in physics. "To me it sends a message of 'we considered your side with some legitimacy.'"

If the verdict stands after a planned appeal, Tenenbaum said he'll file for bankruptcy to cut his losses.

A Boston federal court jury took just three hours to agree that Tenenbaum "willfully" infringed on the copyrights of 30 songs, including Nirvana's "Comes As You Are" and Nine Inch Nails' "The Perfect Drug."

The jury awarded the labels $22,500 for each infringement.

But the songs at issue were only the tip of the iceberg. On the witness stand Tenenbaum unapologetically admitted downloading more than 800 songs from 1999 to 2007 on his home computer in Rhode Island and at college in Maryland.

Often smiling at the jury, he explained he grew up in a family that loves and plays music - his mother is a professional harpist who appeared in court every day - and that music-sharing networks made it easy for him to get the songs he liked.

Coming Events of Interest

Bandwidth Conference - August 27th-28th in San Francisco, CA. Annual gathering of music/media executives and digital music professionals. Bandwidth explores the evolving musical experience - how people discover, purchase, interact with, and are exposed to new music.

Cloud Computing Conference - September 9th in San Diego, CA. Topics will include what's being done in the cloud today, separating myth from reality, while learning about the cloud's opportunities and challenges, gaining an overview of the multi-vendor, multi-product cloudscape combined with real-world examples and insightful analysis.

all2gethernow! - September 16th-18th in Berlin, Germany. An "open source" forward-looking Music 2.0 substitute for the postponed PopKomm, one of the leading international conferences and expos for the music and entertainment businesses worldwide.

New York Games Conference - September 30th in New York, NY. Join games industry leaders - including leading videogame publishers and developers, carriers, portals, technology companies, advertising execs, venture capitalists, lawyers, analysts, and many more.

FMC Policy Summit 2009 - October 4th-6th in Washington, DC. Future of Music's (FMC) annual event where, this year, music, technology, policy and law are going "back to the future." Early-bird discounts are now available.

P2P and Games Conference - October 19th in Santa Monica, CA. The DCIA's first-ever event focusing on the use of P2P technologies for the distribution of games and updates. Industry leaders from around the world will participate.

Digital Hollywood Fall - October 19th-22nd in Santa Monica, CA. With many new sessions and feature events, DHF has become the premiere digital entertainment conference and exposition. DCIA Member companies will exhibit and speak on a number of panels.

Cloud Computing Expo - November 2nd-4th in Santa Clara, CA. Fourth international conference on this subject. Cloud computing is a game changer. The cloud is disrupting traditional software and hardware business models by disrupting how IT service gets delivered.